How does a Solar PV Combo Loan work?
A solar PV combo loan is actually two separate loans that, when combined, provide homeowners with an
optimized, no-money-down finance strategy for their solar PV system installation. Here’s how the two parts
PART 1 OF 2: Short-Term Balloon Loan for 12 or 18 Months
You may be eligible for a federal income tax credit equal to 30% of the cost of your solar PV system installation
(NOTE: please consult your tax advisor). The intention of this short-term balloon loan is to float the amount of this
30% tax credit until after your next annual tax filing. As a result, the principal and interest from this short-term
loan MUST be repaid in full within 12 or 18 months of your solar PV system installation. Significant penalties apply
for late repayment (17.99% interest over your full loan term). As such, this loan is best fit for homeowners
who are able to use the full 30% tax credit to pay off their loan on time. This short-term loan can be prepaid at any
time without penalty and homeowners are encouraged to schedule a one-time, automatic balloon payment on or
before their loan maturity date.
PART 2 OF 2: Long-Term Loan for 12, 15, or 20 Years
The remaining 70% of the cost of your solar PV system installation is covered in the form of a long-term loan
subject to a fixed interest rate and payable in identical monthly installments of principal and interest for a
period of either 12, 15, or 20 years. This long-term loan can be prepaid at any time without penalty, and
homeowners are encouraged to schedule automatic monthly payments.
See an example here.